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Gramercy Capital Corp. Reports Second Quarter 2012 Financial Results

Stocks in this article: GKK

The Company’s legacy businesses are organized into two business segments supported by a corporate balance sheet with a strong liquidity position and no recourse debt obligations.

The Company’s commercial real estate finance business, which operates under the name Gramercy Finance, manages approximately $2.0 billion of whole loans, bridge loans, subordinate interests in whole loans, mezzanine loans, preferred equity, CMBS and other real estate related securities which are financed through three non-recourse CDOs.

The Company’s property management and investment business, which operates under the name Gramercy Realty, currently manages approximately $2.0 billion of commercial properties leased primarily to regulated financial institutions and affiliated users throughout the United States.

A summary of the Company’s GAAP financial position and operations by business segment and consolidated as of June 30, 2012 is as follows:

                                         
Corporate Finance Segment

Realty Segment

Intercompany Eliminations

Consolidated
Total real estate investments, net $ - $ 52,334 $ 28,617 $ - $ 80,951

 

Cash and cash equivalents 192,569 - - - 192,569

 

Loans and other lending investments and commercial   mortgage-backed securities

- 1,839,546 - (28,497 ) 1,811,049

 

Repurchased collateralized debt obligation bonds 47,351 - (47,351 ) -
Other assets   -     131,832     5,452     1,157     138,441  

 

Total assets $ 239,920   $ 2,023,712   $ 34,069   $ (74,691 ) $ 2,223,010  

 

 
Collateralized debt obligations $ - $ 2,393,354 $ 27,227 $ (74,578 ) $ 2,346,003

 

Derivative instruments - 180,753 - - 180,753

 

Dividends payable 26,857 - - - 26,857

 

Other liabilities   -     15,498     6,829     (113 )   22,214  

 

Total liabilities   26,857     2,589,605     34,056     (74,691 )   2,575,827  

 

 
Total equity   213,063     (565,893 )   13     -     (352,817 )

 

Total liabilities and equity $ 239,920   $ 2,023,712   $ 34,069   $ (74,691 ) $ 2,223,010  

 

 
Revenues:
Net interest income $ - $ 16,445 $ (404 ) $ - $ 16,041

 

Rental and reimbursement revenues - 789 924 - 1,713

 

Management fees - - 9,616 - 9,616

 

Other revenue (1)   -     1,527     -     -     1,527  

 

Total revenues   -     18,761     10,136     -     28,897  

 

 
Expenses:
Property operating expenses - 3,052 6,353 - 9,405

 

Impairment and loan losses - 21,995 - - 21,995

 

Management, general and administrative 9,822 1,264 842 - 11,928

 

Depreciation - 115 197 - 312

 

Other expenses   -     -     -     -     -  

 

Total expenses   9,822     26,426     7,392     -     43,640  

 

 

Loss from continuing operations before    provision for taxes

$ (9,822 ) $ (7,665 ) $ 2,744   $ -   $ (14,743 )

 

 
(1) Includes equity in net income from joint venture.
 

The Company’s GAAP book value per common share is negative $(8.39) per share, or $(439.0) million at June 30, 2012. Of the negative book value, approximately $(565.9) million, or $(10.82) per common share, is attributable to the Company’s commercial real estate finance business. While the assets and liabilities in the CDOs are consolidated on the Company’s books for GAAP purposes, the Company’s exposure to loss is limited to its investment in each CDO. The negative book value of the commercial real estate finance business is primarily attributable to impairments and mark-to-market adjustments made to the loan and CMBS investments financed in the CDOs in excess of the Company’s equity investment in each CDO. Due to the non-recourse nature of the CDOs, ultimately, any loss in excess of the CDO liabilities outstanding will not be realized by the Company.

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